While Greece Implodes, France Corrodes and Spain Erodes

But there are other developments that deserve attention. Amazingly, some politicians think Europe’s stagnant economy can be improved with more harmonization, more bureaucratization, and more centralization.

The EU Observer has a story about a French scheme to transform the eurozone into a supranational government.

French president Francois Hollande has called for a stronger more harmonised eurozone… “What threatens us is not too much Europe, but too little Europe,” he said in aletterpublished in the Journal du Dimanche. He called for a vanguard of countries that would lead the eurozone, which should have its own government, a “specific budget” and its own parliament. …French prime minister Manuel Valls Sunday said…France would prepare “concrete proposals” in the coming weeks. “We must learn the lessons and go much further,” he added, referring to the Greek crisis.

So why is anyone supposed to believe that adding a new layer of government is going to make Europe more prosperous?

In all likelihood, the French are pursuing this agenda for two selfish reasons.

A “harmonised eurozone” means that all affected nations would have to abide by the same rules, and that inevitably means taxes and regulations are set at the most onerous levels. The French think that’s a good idea because it’s a way of undermining the competitiveness of other eurozone nations.

A eurozone government with a “specific budget” sets the stage for more intergovernmental transfers in Europe. The French think that’s a good idea since they presumably could prop up their decrepit welfare state with money from taxpayers in nations such as Germany, Finland, and the Netherlands.

By the way,not all French politicians are totally misguided.

At least one of them is expressing more sensible ideas, as reported by the U.K.-based Telegraph.

France is “the sick man ofEurope”, François Fillon, the former centre-Right prime minister, has said in an open letter to French presidentFrancois Hollande, calling for urgent economic reforms.“The Greek tragedy shows that the threat of bankruptcy is not abstract,” according to Mr Fillon… French commentators writing about the Greek crisis in recent days have pointed out that France’s own national debt of more than €2 trillion (£1.4 trillion), amounting to 97.5 per cent of GDP, places it in the same league as Spain and other southern European countries.

One of Spain’s “ghost airports”—expensive projects that were virtually unused—received just one bid in a bankruptcy auction after costing about €1.1 billion ($1.2 billion) to build. The buyer’s offer: €10,000. Ciudad Real’s Central airport, about 235 kilometers south of Madrid, became a symbol of the country’s wasteful spending.

But Spanish politicians should be known for more than just misguided boondoggles.

Some of them also are working hard to make sure citizens don’t work too hard. Here’s a story from an English-language news outlet in Spain (h/t: Commentator).

Between the hours of 2pm and 5pm you will struggle to find anyone in the Valencian town of Ador; the town’s inhabitants will have taken to their beds to catch their mandatory forty winks. The town’s summer siesta tradition is so deep-rooted the mayor has enshrined his citizen’s right to an afternoon snooze in law. …Ador could be the first town in Spain to actually make taking a siesta obligatory by law. …The new rules also stipulate that children should remain indoors:

One imagines the next step will be mandatory bed checks by new bureaucrats hired for just that purpose.

Though maybe they would need special permission to take their mandatory siestas from 11:00-2:00 so they would be free to harass the rest of the population between 2:00-5:00.

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That big a French government will conscript people to work — and with enough enthusiasm to outcompete smaller government jurisdictions — bring french growth on par with world average (4% trendline) — and avert french decline.

For the Northern Europeans, the moment they signed up “to an ever closer union” the fate of their prosperity was sealed. People in Europe know quite well how democracy works. Northern wallets will thus be voted away.

Not that the Northern European nations needed that much help on their path to decline. Their structural growth rate is already around 2% at best, half the world average. So they’re already in decline all by themselves. Redistribution has already flattened the Northern European reward-curve too much for Northern Europeans to be competitive worldwide (no, a BMW and other industries are not enough to keep your prosperity standing in the world, a 2% growth rate in a world that is growing by 4%, encapsulates a trajectory of decline).

So now imagine what an additional layer of redistribution, at the supranational cross country level this time, will do for that already flatter European effort-reward curve.

Europe will ride its decline all the way.

The population of Europe still aspires in the idea that a protectionist pan european regulatory environment with its intra and inter national redistribution homogenization and harmonization will somehow spur European citizens into high levels of motivation, growth rates that at least match the world average, and retention of first world status!!

Alas, at half the average structural growth rate, Europeans are fast moving towards the middle income world — their lofty ideas of coercive collectivism and all.

But perhaps Europe’s disintegration (a good thing for those few countries poised to choose supply side policies once free) is closer than I think.

There seems to be a nascent deep discord between north and south. My guess is that the north will turn towards the statist right, while the south will turn towards the statist left. The details of who turns right and who left are not that important. They will all be statists. It will be a classic nasty Hayekian fight between ideological siblings. Which decline forces will prevail? The fight between right and left statists? The integration bureaucracy that will try to hold everyone together in an orderly decline? Hard to tell.

But does it really matter how Europe declines? Not really. Trying to predict the details is a spicy exercise, but largely irrelevant in the bigger scheme of things. The bottom line is that the flatter (and now flattening even more with rising cross nation redistribution) effort reward curves of the European welfare continent structurally demotivate people and result in structural growth rates that are half the world average, or less. And without growth that at least matches the planetary average, nothing is sustainable. Nothing.

This was a fantastic article regarding Greece, France, and Spain, one that I really enjoyed. I especially liked the concise way in which it conveyed all the information required succinctly. I’m a 15 year old with a blog on finance and economics at shreysfinanceblog.com. It would be very much appreciated if you could read and reblog one of my articles! Thanks again for this great article.